Method for electronic transaction settlement

ABSTRACT

A method implemented in an electronic communication system associated with a settlement house for settling an electronic transaction between a customer and a merchant. The communication system receives through a first electronic communication path a first account identifier of a first account associated with the customer and a transaction amount from the merchant, contacts the customer through a second electronic communication path to allow the customer to select a payment method, and sends through a third electronic communication path the transaction amount and a second account identifier of a second account associated with the customer to a financial services provider associated with the payment method.

CROSS REFERENCE TO RELATED APPLICATIONS

This application is a continuation application of U.S. patentapplication Ser. No. 13/079,151, filed Apr. 4, 2011, entitled, “Methodfor electronic transaction settlement”, which is a continuation of U.S.patent application Ser. No. 12/983,887, filed Jan. 4, 2011, entitled,“System for electronic transaction settlement”, which is a divisionalapplication of U.S. patent application Ser. No. 09/851,553, filed May 8,2001, entitled, “System and method for electronic transactionsettlement”, both aforementioned applications of which are incorporatedherein by reference in their entirety.

FIELD OF THE INVENTION

This invention relates generally to electronic transactions and moreparticularly to electronic transaction settlement.

BACKGROUND

Customers are increasingly using electronic means to purchase goods andservices. To complete a credit card transaction, merchants typically nolonger make a physical imprint of the card. Instead, a magnetic strip onthe card is read by a computer to access the customer's credit cardnumber and expiration date. Many people now also use debit cards to payfor goods and services, where the transaction amount is deducted from abank account. Some transactions are carried out where the merchant hasno physical contact with the credit card. For example, when orderinggoods or services via a merchant's Internet website, a customertypically enters a credit card type, number, and expiration date intofields of a web form.

Enjoyment of some goods and services still requires the physicalpresence of the customer, for example dining at a restaurant. In such asituation, if customers wish to use a credit or debit card, then theymust have that card upon their person. For this reason, many peoplehabitually carry multiple cards with them at all times. This increasesthe chances of one or more of the cards being lost or stolen.

Also, in a restaurant situation, a credit or debit card may be out ofthe customer's possession for a length of time, when one or more personsmay have an opportunity to copy the card number and expiration date. Itis a significant concern of customers to be able to enjoy theconvenience of using credit and debit cards while minimizing the risk ofunauthorized access to their card numbers.

SUMMARY OF THE INVENTION

The method for electronic transaction settlement includes a customerproviding an account identifier and contact information to a merchant,the merchant contacting a settlement house and transmitting the accountidentifier and a transaction amount, the settlement house contacting thecustomer, preferably via a mobile communication device such as a mobiletelephone or a handheld computing device.

The customer then selects a payment method, such as a credit card ordebit card. The customer may have several options to choose from. Thecustomer's communication device transmits the selection to thesettlement house. The settlement house contacts a credit provider or thecustomer's bank for authorization. If the settlement house receives anauthorization, the settlement house transmits it to the client, who thentypically approves the amount.

The settlement house then completes the transaction with the creditprovider or customer's bank and the merchant's bank. If the customerselected a credit card, the credit provider adds a charge in thetransaction amount to the customer's account. If the customer selected adebit card, the customer's bank deducts the transaction amount from thecustomer's bank account. The merchant's bank credits the merchant'saccount with the transaction amount.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a block diagram of one embodiment of an electronic transactionsettlement system, in accordance with the invention;

FIG. 2 is a block diagram of a further embodiment of an electronictransaction settlement system, in accordance with the invention; and

FIG. 3 is a flowchart of method steps for settling electronictransactions, in accordance with one embodiment of the invention.

DETAILED DESCRIPTION

FIG. 1 shows an electronic transaction settlement system including, butnot limited to, a settlement house 110, a merchant 112, a merchant'sbank 114, a credit provider 116, and a customer 118. Merchant 112 may bea retail store, restaurant, wholesaler, or any other type of provider ofgoods or services. Merchant's bank 114 may be any type of financialservice provider where merchant 112 maintains an active account. Creditprovider 116 is a financial service provider that provides a line ofcredit to customer 118. For example, credit provider 116 may have issueda credit card to customer 118. Customer 118 is preferably an individualconsumer, but may also be a representative of a business or non-profitorganization.

Settlement house 110 is preferably an entity independent of merchant112, merchant's bank 114, credit provider 116, and customer 118;however, in some embodiments settlement house 110 may be affiliated withone or more of the other parties. For example, settlement house 110 mayinclude credit provider 116. Settlement house 110 preferably hascommunication paths to merchant 112, merchant's bank 114, and creditprovider 116. The communication paths may include an Internetconnection, a PSTN connection, a Local Area Network (LAN) connection, aWide Area Network (WAN) connection, a wireless network connection, or acombination of the above.

Customer 118 preferably communicates, at least in part, via a wirelesscommunication path with settlement house 110. Customer 118 may use anytype of mobile communication device, including but not limited to amobile telephone, a pager, and a handheld computing device such as apersonal digital assistant (PDA). Customer 118 may use any type ofinterface to communicate with settlement house 110, including keystrokes, voice commands, or a touchscreen.

Settlement house 110 manages settlement of transactions between merchant112, merchant's bank 114, credit provider 116, and customer 118. Forinstance, a purchase by customer 1118 from merchant 112 may include atransaction between customer 118 and credit provider 116, a transactionbetween credit provider 116 and merchant's bank 114, and a transactionbetween merchant 112 and merchant's bank 114.

Customer 118 preferably maintains an account with settlement house 110.The account may contain information regarding several options forpayment, including a bank debit card and one or more credit cards.

To initiate a purchase, customer 118 provides contact information ofsettlement house 110 to merchant 112. Customer 118 also provides accountinformation, such as a name or account number, to merchant 112. Merchant112 uses the contact information to initiate communications withsettlement house 110. Merchant 112 then transmits the accountinformation for customer 118 and the purchase amount. Settlement house110 then completes the transaction so that credit provider 116 adds acharge to the credit account of customer 118 and merchant's bank 114records a payment into the account of merchant 112. Further details of atransaction settlement are discussed below in conjunction with FIG. 3.

Throughout the purchase transaction, merchant 112 does not have accessto the credit account number of customer 118, which provides privacy tocustomer 118. If credit provider 116 denies the transaction, customer118 may then select a credit account with another credit provider (notshown). Customer 118 is thus spared any embarrassment due to a denial ofa credit transaction.

FIG. 2 shows an electronic transaction settlement system including, butnot limited to, settlement house 110, merchant 112, merchant's bank 114,a customer's bank 216, and customer 118. Customer 118 maintains anaccount with customer's bank 216. The account may be a checking account,a savings account, or any other type of bank account. Customer 118preferably has a debit card with an associated debit card number thatallows him or her to pay for purchases with monies from the account withcustomer's bank 216.

In the FIG. 2 embodiment, settlement house 110 uses the debit cardnumber to settle transactions with customer's bank 216. Customer 118provides contact information and a name or account information tomerchant 112. Merchant 112 contacts settlement house 110 and transmitsthe name or account information and the amount of the transactions.Settlement house 110 then contacts customer 118 via a mobile telephoneor other communication device. Customer 118 selects a payment method, inthis embodiment the debit card. Settlement house 110 then contactscustomer's bank 216 to request payment for the amount of thetransaction.

Although not shown if FIG. 2, customer 118 may also select additionalpayment methods. Customer 118 may have an account with a financialservice provider that may or may not be a bank or credit provider andmay select to pay using that account. For example, if customer 118 is ateenager, a parent may deposit an amount of money with a financialservice provider who establishes an account accessible by the teenager.Thus the parent may provide spending money to the teenager without usingcash.

FIG. 3 is a flowchart of method steps for settling electronictransactions, according to one embodiment of the invention. First, instep 310, customer 118 provides identification to merchant 112. Theidentification may include the customer name, an account name or number,or any other type of identification. Customer 118 may also providecontact information for settlement house 110. Next, in step 312,merchant 112 transmits the identification of customer 118 to settlementhouse 110.

In step 314, settlement house 110 contacts customer 118. Settlementhouse 110, may place a call to a mobile telephone of customer 118, orcontact customer 118 via any other type of mobile communication device.Then, in step 316, customer 118 selects a payment method, for example acredit card, and this selection is transmitted to settlement house 110.Customer 118 may have the option of choosing among several credit cardsor debit cards, depending on his or her arrangement with settlementhouse 110.

In step 318, settlement house 110 contacts credit provider 116 forapproval of the transaction. Settlement house 110 then transmits theaccount information, for example the credit card number, and the amountof the transaction. In step 320, credit provider 116 approves or deniesthe transaction. If credit provider 116 denies the transaction, then instep 322 settlement house 110 forwards the denial to customer 118. Themethod returns to step 316, where customer 118 may select an alternatepayment method.

If credit provider 116 approves the transaction, then in step 324settlement house 110 forwards the approval to customer 118, and customer118 approves (OKs) the transaction to settlement house 110. Customerapproval may include an additional amount to add to the transaction, forexample when using a debit card and requesting cash. In step 326,settlement house 110 sends the approval of customer 118 to creditprovider 116, which then adds a charge in the transaction amount to theaccount of customer 118. In step 328, settlement house 110 sends atransaction record to merchant's bank 114, which the credits the accountof merchant 112 with the transaction amount.

The invention has been explained above with reference to a preferredembodiment. Other embodiments will be apparent to those skilled in theart in light of this disclosure. For example, the present invention mayreadily be implemented using configurations other than those describedin the preferred embodiment above. Additionally, the present inventionmay effectively be used in conjunction with systems other than the onedescribed above as the preferred embodiment. Therefore, these and othervariations upon the preferred embodiments are intended to be covered bythe present invention, which is limited only by the appended claims.

What is claimed is:
 1. A method implemented in an electroniccommunication system associated with a settlement house for settling anelectronic transaction between a customer and a merchant, the methodcomprising: receiving in the system from the merchant through a firstelectronic communication path a first account identifier of a firstaccount associated with the customer at the settlement house and atransaction amount; contacting in the system the customer through asecond electronic communication path to allow the customer to select apayment method; and sending in the system through a third electroniccommunication path the transaction amount and a second accountidentifier of a second account associated with the payment method to afinancial services provider associated with the payment method.
 2. Themethod of claim 1 further comprising: transmitting in the system anapproval response from the financial services provider to the customer;and transmitting in the system customer approval from the customer tothe financial services provider.
 3. The method of claim 2 furthercomprising: sending in the system a transaction record to a bankassociated with the merchant.
 4. The method of claim 1, wherein thesecond account identifier is one of a credit card number and a debitcard number.
 5. The method of claim 1, wherein the financial serviceprovider is a bank.
 6. The method of claim 1, wherein the financialservices provider is not a bank or credit provider.
 7. A methodimplemented in an electronic communication system associated with asettlement house for settling an electronic transaction between acustomer and a merchant, the method comprising: receiving in the systemfrom the merchant through a first electronic communication path a firstaccount identifier of a first account associated with the customer atthe settlement house and a transaction amount; contacting in the systemthe customer through a second electronic communication path to allow thecustomer to select a first payment method; sending in the system througha third electronic communication path the transaction amount and asecond account identifier of a second account associated with the firstpayment method to a first financial services provider associated withthe first payment method; transmitting in the system a denial responsefrom the first financial services provider to the customer; receiving inthe system from the customer the selection of a second payment method;and sending in the system the transaction amount and a third accountidentifier of a third account associated with the second payment methodto a second financial services provider associated with the secondpayment method.
 8. The method of claim 7 further comprising:transmitting in the system an approval response from the secondfinancial services provider to the customer; and transmitting in thesystem a customer approval from the customer to the second financialservices provider.
 9. The method of claim 8 further comprising: sendingin the system a transaction record to a bank associated with themerchant.
 10. The method of claim 7, wherein the second accountidentifier is one of a credit card number and a debit card number. 11.The method of claim 7, wherein the first financial services provider isa bank.
 12. The method of claim 1, wherein the first financial servicesprovider is not a bank or credit provider.
 13. A method implemented inan electronic communication system associated with a settlement housefor settling an electronic transaction between a customer and amerchant, the method comprising: receiving in the system from themerchant through a first electronic communication path a first accountidentifier of a first account associated with the customer at thesettlement house and a transaction amount; sending in the system througha second electronic communication path the transaction amount and asecond account identifier of a second account associated with thecustomer to a financial services provider associated with the secondaccount; and receiving in the system through a third electroniccommunication path an approval of the customer of the electronictransaction.
 14. The method of claim 13 further comprising: transmittingin the system an approval response from the financial services providerto the customer.
 15. The method of claim 14 further comprising: sendingin the system a transaction record to a bank associated with themerchant.
 16. The method of claim 13, wherein the second accountidentifier is one of a credit card number and a debit card number. 17.The method of claim 13, wherein the financial services provider is abank.
 18. The method of claim 13, wherein the financial servicesprovider is not a bank or credit provider.